Ethereum is one of the most valuable cryptocurrencies in the world, as it has brought several innovations in the crypto sector. Given its popularity, it is not surprising that so many people consider Ethereum and want to be part of the Ethereum ecosystem. But, to make the right decisions, investors need to know how to buy crypto safely, search for a good exchange platform, like Binance and choose a storage method. For the last aspect, it is good to keep in mind that there are Ethereum wallets that enable anyone to store their digital coins safely.
Here is everything you need to know about an Ethereum wallet.
Ethereum wallets
Ethereum wallets allow everyone to manage their accounts on the Ethereum network. Although it works in a similar way to an email account, it is used for different operations, like creating smart contracts and dApps or sending transactions. Ethereum wallets’ features vary and are available in numerous shapes and sizes. For example, some wallets can be used just for sending ETH, while others have more functionalities, allowing users to create smart contracts as well.
To create an Ethereum wallet, a person must download or write down a private key or a seed phrase to safely store the funds. Wallets are the safest way to store cryptocurrencies, as in this way, the chances that a hacker can access the accounts are reduced significantly.
With the help of an Ethereum wallet, everyone can send or receive Ether and manage the cryptos as desired. The wallet doesn’t contain ETH but the privileged credentials to access the blockchain. The Ethereum wallet also includes both a digital key and an address. The address is a 64-character string of numbers and letters to keep the assets secured. An Ethereum wallet can be used to interact with all the features on the Ethereum network.
Types of Accounts in Ethereum
Two types of accounts can be created with Ethereum: Contract Accounts and Externally Owned Accounts (EOAs). An EOA costs nothing, and anyone can have as many accounts as they wish. The private key is used to validate the transactions in this type of account. An Externally Owned Account is created whenever an Ethereum wallet is made, allowing transactions only with ETH.
A Contract Account can perform all the features of an EOA, the only difference being that it is formed when a contract code is deployed. It is also known as a smart contract. Each contract has a unique Ethereum address but doesn’t include a private key to control it. The benefits of a Contract Account are using more than a single signature to authorize transactions, viewing incoming transactions, and setting daily limits.
Different types of Ethereum wallets
Having an Ethereum wallet is an effective method to keep digital assets safe. There are many types of Ethereum wallets, like the following.
Smart Contracts Wallets
A private key does not control an Ethereum smart wallet, but, as the name suggests, a smart contract does. Smart contract wallets have important features, like daily transfer limits, emergency account freezing, or account recovery. As the transactions are made on blockchain technology, investors can keep their digital assets secure and safe. Smart contract wallets can be divided into full-node and light-node client wallets.
Full-Node Client Wallet
A full node is a computer program that validates blocks and transactions and holds the entire Ethereum blockchain history. Anyone capable of running their own node can host their wallet and control each transaction that comes in and goes out. Some programs, like Goth, are developed by the Ethereum Foundation that can run a full-node, but the operations are in the hands of people who own the wallet.
Light-Node Client wallet
Light node wallets allow people to carry out transactions on the blockchain network without downloading. It relies on third-party full nodes, which is a good alternative, as running a node can be costly and difficult. But with this option, investors only need to connect to the blockchain and have access to the internet. It can be used even on devices with limited space, like a smartphone.
Key features to keep in mind before choosing an Ethereum wallet
Anyone who wants to get involved in the Ethereum community and purchase ETH needs a wallet to store their digital assets securely. The best alternative to keep in mind is a wallet that can hold ERC-20 tokens. A good Ethereum wallet is one that meets the needs of an investor or user and gives better access to DeFi applications, dApps, or NFT marketplaces. These are the key features of an Ethereum wallet:
- Portability
- Security
- User-friendly interface
- Multi-currency support
Also, there are some practices that everyone needs to know about. For example, it is recommended to use mobile crypto wallets only on trustworthy networks and not in public spaces. Also, the seed phrase should not be shared with anyone and should be only known by the person who owns the wallet.
How can you fund Ethereum wallets?
After opting for an Ethereum wallet, the next step is adding ETH. Ether can be purchased from a centralized exchange, and the funds can be withdrawn to the Ethereum wallets. In order to complete a transaction, a fee must be paid to the network validators. There is no fixed amount of sum because it depends on the blockchain’s block space.
Final words
Ethereum is one of the most popular cryptocurrencies investors are considering today, and it is a good idea to opt for this digital asset, as it has more innovations than the other alternatives on the market. But to keep the virtual coins safe, a wallet is needed so that the digital assets will be protected and no one else but you will have access to it. Each Ethereum wallet has advantages and disadvantages, so it is good to review the choices before selecting one. The best features to have in an Ethereum wallet are ease of use, security, and compatibility with various operating systems.
